China Fears Financial War Could Result the Country Being Removed From Global Dollar System

Escalation in tensions with the US makes China suspicious of a worsening financial war that could result in it being shut out of the global dollar system, a possibility once regarded as unthinkable.

Those concerns have resulted in a re-appearance of the idea of Chinese yuan’s internationalization. Some economists think that yuan internationalization is becoming a “must-have”.

Although a complete separation of the countries’ economies is not likely, the Trump Administration is trying to force a partial separation in trade, technology and financial activity.

Washington unleashed several actions penalizing China, last of which included  bans on the Chinese TikTok and WeChat apps.

US cutting China off from the dollar system or a Chinese retaliation of selling a big chunk of U.S. debt could shake financial markets and damage the global economy.

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